What is portfolio concentration?
Portfolio concentration describes how much of a fund's money sits in its largest holdings. A concentrated fund puts a big share into a few stocks, while a diversified fund spreads its money across many.
Position weight
A holding's weight is its value divided by the total value of the portfolio. A stock at 20 percent weight makes up one fifth of everything the fund reported in its 13F.
Top 10 share
Adding up the weights of the ten largest holdings is a quick way to see concentration. A fund with 80 percent in its top ten is far more concentrated than one with 20 percent.
What it can tell you
A large weight usually means the manager believes strongly in the idea, because they are willing to let one stock drive results. Small positions may be new starter positions, hedges (positions meant to offset risk), or ideas the manager is less sure about.
Limits
Weights only cover what a 13F reports. Cash, bonds, short positions, and most stocks listed outside the US are missing, so the real portfolio can look quite different.
Frequently asked questions
Is a concentrated portfolio riskier?
It depends more on a few stocks, so results can swing more in both directions. Some well known investors run concentrated portfolios on purpose.
Where can I see a fund's biggest positions?
Each investor page on Stockslash shows holdings by weight and a bar of the top positions.